TAX ALERT – Update on New Tax Proposals
Today, federal Finance Minister Bill Morneau made another announcement in respect to the July 18, 2017 proposals indicating that the Government will not be moving forward with the proposed measures relating to conversion of income into capital gains. This announcement comes in response to significant concerns raised during the consultation period about the consequences of these proposals, particularly in respect to taxation on death and intergenerational transfers of businesses.
Yesterday’s announcement related to the passive income measures. Again in response to concerns raised during the consultation period, Minister Morneau indicated that in further developing these particular measures the Government will ensure that:
- Past investments and the income earned from those investments will be protected;
- Businesses will still be able to save for contingencies and for future investments in growth;
- There will be a $50,000 threshold on passive income in a year; and
- There will be incentives in place so that Canada’s venture capital and angel investors can continue to invest in innovation.
Earlier this week, the Government:
- Announced a reduction in the federal small business rate from the current 10.5% to 10% effective on January 1, 2018 and to 9% effective on January 1, 2019; and
- Promised to simplify the proposals that were issued in July in respect to income splitting in order to reduce the compliance burden on small business and not to move forward with proposed measures to limit access to the lifetime capital gains exemption.
While there is clearly good news within these announcements, details are extremely lacking in some areas and it remains to be seen whether the revised draft legislation will live up to the announcements. It is expected that revised draft legislation will be coming some time in November.
There is also still time left during Small Business Week and we can likely expect another announcement tomorrow… stay tuned!
To learn more or if you have any questions regarding the above information, please contact your Facet Advisors professional, or call us at 604-534-3004.